Newberry Observer
March 25, 2020
By Frank Knapp Jr.
Small business is in a crisis because of government’s appropriate actions to contain the coronavirus from spreading.
Consumer demand has fallen to the floor.
How serious is it?
A survey released this week by Businesses for Responsible Tax Reform of its network of small businesses found 70% have lost 50% or more of their revenue
Goldman Sachs conducted a national survey of small businesses last week and found that about 51% of the owners said that under current conditions they would only be able to “operate for 0-3 months.”
The South Carolina Small Business Chamber of Commerce conducted a poll of its supporters this week and found about 60% saying that, without an infusion of cash, their business would not survive the next 3 months.
Newberry coffee café, Genesis Hub, is one of the fortunate small businesses in this time of economic crisis. While their business is down about 50% and employee hours have been reduced, owner Eddie Long doesn’t see closing in his store’s future. To increase revenue, he is promoting a subscription service to his in-store roasted coffee and trying to expand online sales of other products.
Like Genesis Hub, small businesses across the country are cutting costs primarily by reducing worker hours and layoffs. Other costs are harder to reduce, like payments for rent, utilities, insurance, and existing loans.
And with the dramatic increase in unemployment, there is even less money circulating in the economy to help with consumer demand.
Many economists insist that we are already in a recession and no one knows how long it will take to revive the economy when the health crisis eases.
What experience from the recent Great Recession tells us is that it will be small businesses that will lead us out of this recession by creating jobs.
But that won’t happen if we lose small businesses in the next three months at the rate indicated by surveys. Without our small businesses, we will be facing a very long road back, possible years, to a healthy economy.
That is why it is critical for Congress to quickly pass a stimulus package that injects cash directly into small businesses to maintain payrolls and cover all other routine business expenses.
This should be done through federal grants given directly to small businesses by the Small Business Administration for payroll and other business expenses. Loans take too much time, will penalize small business owners without superior credit rating and add unwanted.
This infusion of federal dollars would not be a handout.
It would be an investment in keeping people working and getting a regular paycheck instead of a smaller unemployment check. It would be an investment in maintaining a more normal local business economy. It would be an investment in supporting the emotional and psychological health of our citizens as they worry about the future.
And it would be an investment in the essential local small business infrastructure we will need when we turn the corner on this crisis.
Frank Knapp is the president and CEO of the South Carolina Small Business Chamber of Commerce and Co-chair of Businesses for Responsible Tax Reform.